The human retrovirus HTLV-I is the etiologic agent of adult T cell leukemia. The viral transforming protein, Tax, plays a critical role in viral replication and transformation by regulating the expression of viral and cellular genes. Previous studies have demonstrated that Tax interacts with the cellular CREB protein and facilitates the binding of the coactivator and histone acetyltransferase CBP and PCAF, forming a multimeric complex on the CRE-like sites in the HTLV-I promoter. The studies presented in this report focus on the ability of Tax to interact with cellular transcription factors and chromatin modifying proteins to regulate the CREB transcription pathway, which is essential for viral gene expression. We recently demonstrated that arginine methyltransferase CARM1, which methylates histone H3 and p300/CBP, is involved in the regulation of Tax transactivation. Over expression of CARM1 wild type, but not a methyltransferase mutant, resulted in increased Tax transactivation of the HTLV-1 long terminal repeat in CARM1 (+/+) and (-/-) cells. Consistent with these results, general methyltransferase inhibitor adenosine dialdehyde (AdOx) inhibited Tax transactivation. Moreover, CARM1 synergistically activated Tax transcription of the HTLV-1 LTR with the transcriptional co-activator CBP as well as PCAF. A direct physical interaction between HTLV-1 Tax and CARM1 was demonstrated using in vitro glutathione S-transferase (GST)-Tax pulldown, in vivo co-immunoprecipitation and confocal microcopy experiments. Histone methyltransferase assays demonstrated that Tax increased the methyltransferase activity of CARM1 on histone H3. Our data provide the first experimental evidence that CARM1 enhances Tax transcription of the HTLV-1 LTR through a direct interaction between CARM1 and Tax and this binding promotes methylation of H3 in vitro and in vivo.Mechanisms through which Tax interacts and communicates with RNA polymerase II and cyclin dependent kinases are not clearly understood. We have recently demonstrated that Tax recruits P-TEFb, a critical cellular elongation factor, to the viral promoter. The recruitment likely involves protein-protein interactions since Tax associates with P-TEFb in vitro as demonstrated by GST protein pull-down assays and in vivo as shown by co-immunoprecipitation assay. Functionally, a siRNA directed toward CDK9 inhibited Tax transactivation in transient assays. Consistent with these findings, depletion of CDK9 from nuclear extracts inhibited Tax transactivation in vitro. Reconstitution of the reaction with WT P-TEFb, but not a kinase dead mutant, recovered HTLV-1 transcription. Addition of the CDK9 inhibitor flavopiridol blocked Tax transactivation in vitro and in vivo. Our studies further demonstrate that Tax regulates CDK9 kinase activity through a novel autophosphorylation pathway by inducing autophosphorylation of threonine 29, the first experimental evidence of an inhibitory phosphorylation site in CDK9.